SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the quarterly period ended March 31, 2003
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the transition period from to .
(Commission file number 001-15305)
BlackRock, Inc.
(Exact name of registrant as specified in its charter)
| Delaware |
51-0380803 | |
| (State or
other jurisdiction of |
(I.R.S. Employer Identification No.) |
40 East 52nd Street, New York, NY 10022
(Address of principal executive offices)
(Zip Code)
(212) 754-5300
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the proceeding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act.) Yes x No ¨
As of April 30, 2003, there were 18,696,872 shares of the registrant’s class A common stock outstanding and 46,359,649 shares of the registrant’s class B common stock outstanding.
Index to Form 10-Q
FINANCIAL INFORMATION
| Page | ||
| Item 1. Financial Statements |
||
| 1 | ||
| 2 | ||
| 3 | ||
| 4 | ||
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
12 | |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk |
34 | |
| Item 4. Controls and Procedures |
34 | |
| OTHER INFORMATION |
||
| Item 6. Exhibits and Reports on Form 8-K |
35 |
- i -
BlackRock, Inc.
Consolidated Statements of Financial Condition
(Dollar amounts in thousands)
| March 31, 2003 |
December 31, 2002 |
|||||||
| (unaudited) |
||||||||
| Assets |
||||||||
| Cash and cash equivalents |
$ |
191,214 |
|
$ |
255,234 |
| ||
| Accounts receivable |
|
115,020 |
|
|
113,789 |
| ||
| Investments (cost: $246,158 and $211,325, respectively) |
|
244,637 |
|
|
208,743 |
| ||
| Property and equipment, net |
|
92,215 |
|
|
93,923 |
| ||
| Intangible assets, net |
|
182,855 |
|
|
182,827 |
| ||
| Receivable from affiliates |
|
507 |
|
|
281 |
| ||
| Other assets |
|
9,949 |
|
|
9,391 |
| ||
| Total assets |
$ |
836,397 |
|
$ |
864,188 |
| ||
| Liabilities |
||||||||
| Accrued compensation |
$ |
92,581 |
|
$ |
173,047 |
| ||
| Accounts payable and accrued liabilities |
||||||||
| Affiliate |
|
39,628 |
|
|
23,977 |
| ||
| Other |
|
16,302 |
|
|
13,986 |
| ||
| Acquired management contract obligation |
|
6,578 |
|
|
6,578 |
| ||
| Other liabilities |
|
13,106 |
|
|
11,946 |
| ||
| Total liabilities |
|
168,195 |
|
|
229,534 |
| ||
| Stockholders’ equity |
||||||||
| Common stock, class A, 18,839,368 and 17,606,801 shares issued, respectively |
|
188 |
|
|
176 |
| ||
| Common stock, class B, 46,658,154 and 47,629,373 shares issued, respectively |
|
466 |
|
|
476 |
| ||
| Additional paid—in capital |
|
202,601 |
|
|
199,990 |
| ||
| Retained earnings |
|
476,067 |
|
|
440,747 |
| ||
| Unearned compensation |
|
(1,226 |
) |
|
(1,535 |
) | ||
| Accumulated other comprehensive loss |
|
318 |
|
|
231 |
| ||
| Treasury stock, class A, at cost, 142,496 and 38,714 shares issued, respectively |
|
(5,911 |
) |
|
(1,469 |
) | ||
| Treasury stock, class B, at cost, 298,505 and 281,281 shares issued, respectively |
|
(4,301 |
) |
|
(3,962 |
) | ||
| Total stockholders’ equity |
|
668,202 |
|
|
634,654 |
| ||
| Total liabilities and stockholders’ equity |
$ |
836,397 |
|
$ |
864,188 |
| ||
See accompanying notes to consolidated financial statements.
1
PART I—FINANCIAL INFORMATION (continued)
Item 1. Financial Statements (continued)
BlackRock, Inc.
Consolidated Statements of Income
(Dollar amounts in thousands, except share data)
(unaudited)
| Three months ended |
||||||||
| 2003 |
2002 |
|||||||
| Revenue |
||||||||
| Investment advisory and administration fees |
||||||||
| Mutual funds |
$ |
48,740 |
|
$ |
55,259 |
| ||
| Separate accounts |
|
77,625 |
|
|
76,516 |
| ||
| Other income |
||||||||
| Affiliate |
|
1,250 |
|
|
1,250 |
| ||
| Other |
|
15,136 |
|
|
13,088 |
| ||
| Total revenue |
|
142,751 |
|
|
146,113 |
| ||
| Expense |
||||||||
| Employee compensation and benefits |
|
55,386 |
|
|
60,387 |
| ||
| Fund administration and servicing costs |
||||||||
| Affiliate |
|
6,943 |
|
|
13,178 |
| ||
| Other |
|
1,015 |
|
|
— |
| ||
| General and administration |
||||||||
| Affiliate |
|
2,061 |
|
|
1,900 |
| ||
| Other |
|
23,048 |
|
|
20,512 |
| ||
| Amortization of intangible assets |
|
232 |
|
|
201 |
| ||
| Total expense |
|
88,685 |
|
|
96,178 |
| ||
| Operating income |
|
54,066 |
|
|
49,935 |
| ||
| Non-operating income (expense) |
||||||||
| Investment income |
|
3,529 |
|
|
3,020 |
| ||
| Interest expense |
|
(164 |
) |
|
(183 |
) | ||
| Total non-operating income |
|
3,365 |
|
|
2,837 |
| ||
| Income before income taxes |
|
57,431 |
|
|
52,772 |
| ||
| Income taxes |
|
22,111 |
|
|
21,373 |
| ||
| Net income |
$ |
35,320 |
|
$ |
31,399 |
| ||
| Earnings per share |
||||||||
| Basic |
$ |
0.54 |
|
$ |
0.49 |
| ||
| Diluted |
$ |
0.54 |
|
$ |
0.48 |
| ||
| Weighted-average shares outstanding |
||||||||
| Basic |
|
65,056,537 |
|
|
64,648,511 |
| ||
| Diluted |
|
65,867,032 |
|
|
65,219,988 |
| ||
See accompanying notes to consolidated financial statements.
2
PART I—FINANCIAL INFORMATION (continued)
Item 1. Financial Statements (continued)
BlackRock, Inc.
Consolidated Statements of Cash Flow
(Dollar amounts in thousands)
(unaudited)
| Three months ended |
||||||||
| 2003 |
2002 |
|||||||
| Cash flows from operating activities |
||||||||
| Net income |
$ |
35,320 |
|
$ |
31,399 |
| ||
| Adjustments to reconcile net income to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
|
5,295 |
|
|
5,001 |
| ||
| Stock-based compensation |
|
2,614 |
|
|
2,348 |
| ||
| Deferred income taxes |
|
1,101 |
|
|
3,722 |
| ||
| Tax benefit from stock-based compensation |
|
4,167 |
|
|
5,882 |
| ||
| Purchase of investments, trading, net |
|
(17,836 |
) |
|
(17,350 |
) | ||
| Net gain on investments |
|
(248 |
) |
|
(325 |
) | ||
| Changes in operating assets and liabilities: |
||||||||
| Increase in accounts receivable |
|
(1,231 |
) |
|
(8,511 |
) | ||
| Increase in receivable from affiliates |
|
(226 |
) |
|
(9,280 |
) | ||
| (Increase) decrease in other assets |
|
(558 |
) |
|
830 |
| ||
| Decrease in accrued compensation |
|
(75,071 |
) |
|
(65,262 |
) | ||
| Increase in accounts payable and accrued liabilities |
|
16,866 |
|
|
11,465 |
| ||
| Increase in other liabilities |
|
1,160 |
|
|
904 |
| ||
| Cash used in operating activities |
|
(28,647 |
) |
|
(39,177 |
) | ||
| Cash flows from investing activities |
||||||||
| Purchase of property and equipment |
|
(3,355 |
) |
|
(13,710 |
) | ||
| Purchase of investments |
|
(17,368 |
) |
|
(14,402 |
) | ||
| Acquisition of business, net of cash acquired |
|
(260 |
||||||